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Ben Brubaker-Zehr | October 1, 2019

How Great Startups Stay agile as They Scale

When your team is small - staying coordinated and aligned is easy. It happens organically. It’s daily standups, high fives, and beers after work. Everyone communicates with everyone - so sharing information and adapting to change is practically effortless.

As teams grow, things get more complex - it becomes harder for everyone to stay connected, and one day, out of nowhere, something happens... a ball gets dropped and no-one seems to know who owned it, or an employee leaves and it becomes clear just how much critical work she was doing.  In other words, it becomes difficult to stay aligned and connected without actually trying to. 

The typical approach to this problem is to introduce a formal "Organizational Structure". Most commonly, this looks like the creation of roles that don’t actually do work, but rather ensure that the right work is getting done. Managers serve as a conduit - between executive levels where strategy gets set, and contributor levels where work gets done. The mechanism for alignment is the flow of information up and down the corporate hierarchy. Each person only needs to be capable of articulating their work, and the work of their direct subordinate for the organization to “maintain” alignment. I call this the structural approach to alignment. 

 

A Changing World

The "Structural Approach" has been the dominant paradigm for a very long time. It was designed by the nearly a century ago in order to respond to the market conditions of the industrial revolution. Today we face a different sort of revolution brought on by our transition from a labour driven economy to a skills based economy. Instead of using time to produce outcomes we deploy creative, cognitive, and collaborative effort. This change has driven everyone and everything to become connected across one massive network which has allowed us to accelerate an already dizzying pace of innovation.

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As it turns out, the more complex our world becomes, the more challenging it is to keep everyone engaged and working in the same direction. Change happens more quickly than it can be communicated up and down the corporate ladder. As a result, those at the “top” become increasingly disconnected from what’s happening in the market while those interacting with the market become increasingly disconnected from the vision and strategy. If this sounds like a familiar experience - it probably is. In fact, only about 4% of front line issues are understood by executives while less than half of employees can articulate the company mission, let alone its strategy. In the face of this challenge, companies seem to take one of two major routes. The first is to hold fast and shoehorn the newfound complexity into their classical organizational structure. We’ve learned the hard way that it doesn’t work. In fact, it works so poorly, that the U.S. spends 3 trillion dollars a year in excess management in an attempt to keep things aligned. In turn, this excess management has a distinct impact on the “employee experience”. According to gallup, 84% of your peers are either actively disengaged, or not engaged with their work. This costs the U.S. an additional 500 billion dollars annually.

Recognizing the perils of the status quo, the second approach is to innovate at the structural and cultural levels. These organizations focus heavily on purpose and experiment with dramatically reducing bureaucracy and hierarchy. Successful examples like Zappos, Valve, and Morningstar, have made it clear that management innovation can yield massive competitive advantages. As a result, more and more organizations become inspired to take the divergent leap away from traditional bureaucratic hierarchies.

However, critics of the second way have raised good reasons to consider the consequences before we hastily fire all the managers. The traditional organization, for all it’s slowness and impersonal monotony, recognized the that the key to alignment was information and created structure to distribute it. In departing from a traditional organizational models, companies must find new ways of aligning strategy, with the work of people, and most importantly the “why of it all”.

 

A New Way

Fortunately, this is not a zero sum game. A third option exists. One that doesn’t require the maintenance of the bleak status quo or the abandonment of clarity. Companies around the world are discovering ways of creating alignment by implementing software based solutions that do the work of structure without all the bureaucracy and sadness.

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In their simplest form these solutions make basic information about the strategic objectives and the contributions of people transparent across the organization. A good example is the Objectives and Key Results (OKR) framework. Adopted by companies around the world, OKRs are a static representation of a company’s objectives and the results of accomplishing them.

A common critique of OKRs is that they fairly static. In response, some companies like Shopify, Google, and Buffer have developed internal solutions that are far more dynamic. These aim to go beyond annual goal setting and create a dynamic models of the organization's strategy, work, and people. Perhaps the most famous example of this is Google’s Moma. Though information about Moma hasn’t been widely publicised, a general picture of what it does can be found across the blogs of ex googlers. The stated mission of Moma is “Organize Google’s information and make it accessible and useful to Googlers”. Practically speaking, it’s a searchable database of information on Googler’s, their roles, and the status of ongoing programs and projects. The most important thing about Moma is that it’s real time and open. It enables anyone, from executive to intern, to find who they need, see the work of their fellow googlers, and understand how it all fits together into a broad strategy.

Google isn’t alone. Buffer has a platform called HQ, Shopify has Unicorn - which is part of their mantra to "Get Stuff Done At Scale" (GSDAS) -  and Stripe has Home. Each of these tools works slightly differently, and is a representation of each organization's culture and need. However, what they share is an intention to de-silo the organization, create better lines of sight throughout the organization, and foster the connection between strategy, work, and people. What's significant about this is that it doesn't rely on the organizational structure. It's centralized, and transparent - available to the entire organization. When implemented well, solutions like these tend to drive three mutually constituted outcomes.

 

Organizational Agility

The first is improved organizational agility. By providing broad strategic transparency, and reducing the impact of siloed structures organization’s tend to experience broad improvements in:

  • 65% of companies report higher customer satisfaction and retention
  • 58 % report increased employee productivity and retention
  • 57% report reduced costs
  • Most significantly - 84% report that they are faster to act on new opportunities

 

Reducing Management Overhead

Remember that 3 trillion dollar cost associated with excess management? If you manage people, it’s likely that you spend a fair bit of time figuring out how to coordinate their work. This probably looks a lot like communicating objectives, their rationale, and ensuring that your team has the resources it needs to accomplish them. Imagine if that was no longer part of “managing”. Instead, the hierarchy could be reversed, and instead of passing down information, leaders could spend their time coaching, developing, and supporting their teams.

 

Improved Employee Experience

Employee experience is driven largely by two key factors. One is the relationship with a direct manager. No software solution should attempt to stand in for that. The second however, is one’s felt connection with the organization’s purpose. In other words, people want to feel like their contribution matters. These systems create an environment that makes each person’s contribution explicit and shares it around the organization. Shopify’s unicorn goes even further and enables people to publicly acknowledge and appreciate the contributions made by people across the org.

These three outcomes broadly make up our vision of what the future of work might look like. We don’t see these are overly optimistic, naive, or revolutionary ideas. They are tangible changes organizations can make if they have the courage, and the will to take a small divergent step rooted in a hope for better ways of working together.